INSUBCONTINENT EXCLUSIVE:
NPS or National Pension System is a government-sponsored retirement planning instrument regulated by the Pension Fund Regulatory and
Development Authority (PFRDA)
NPS gives the investor the option to set his or her preferred allocation to different asset classes, such as government bonds, equity market
instruments and corporate debt, among other features
NPS also gives the investor flexibility in terms of timing of contribution, choice of pension fund, and choice of allocation, according to
National Securities Depository's (NSDL) website - npscra.nsdl.co.in
But how does investment in National Pension System (NPS) workHow to open NPS accountAn NPS account can be opened by a citizen of 18-65 years
of age in two modes: online and offline
The subscriber can either apply for an NPS account by visiting a Point of Presence (PoP), or do it online through the e-NPS website
enps.nsdl.com/eNPS, according to NSDL
In the online mode, the applicant is required to quote the Aadhaar or PAN (Permanent Account Number) along with bank details, according to
NSDL.( All you need to know about SBI deposit schemes)The investor contributes to his or her own retirement account, and so does the
employer in favour of the employee
The subscriber contributes to the account without any defined benefit, and the amount of return depends on the overall corpus and income
These pension funds are responsible for managing the pension corpus
Besides investing and accumulating the contributions, they manage the pension corpus through various schemes under the National Pension
System.NPS modes of choiceAfter selection of pension fund manager, the NPS subscriber is required to give the choice of investment
National Pension System offers two approaches to investment in the account: active and auto
In the active choice, the subscriber selects the allocation (in percentage terms) in asset classes
In the auto choice, the funds are automatically allocated to different asset classes depending on the age of the subscriber
This allocation, in case of auto choice, is carried out in a pre-defined matrix, according to the NSDL website.Asset classes available for
investment under NPSNPS enables the investor to design his or her portfolio under the active choice mode
In other words, based on one's risk appetite, the investor can decide the amount of allocation for the four asset classes.These asset
While the tier I NPS account is a pension account, the tier II NPS account is a savings account
This means the subscriber is allowed to withdraw money as and when required from the tier II account, but not the tier 1 account.Initially
available to the government sector and extended to the general public in 2009, NPS is aimed at providing income to individuals in old age.
